Topaz Energy and Marine has this afternoon released a company statement, following disclosure yesterday of “some serious issues” in the company by Renaissance, its Muscat-listed parent company, to the Muscat Securities Exchange.
As reported, Renaissance reported evidence of fraud and financial misconduct within a foreign unit at Topaz on top of disappointing H1 financial results.
Oil & Gas Middle East understands the fraud is in relation to the Finance Manager of a foreign subsidiary unit who enriched himself personally by defrauding Topaz to the tune of $2.9 million over “six and a half years”. The company’s statement goes further than the Renaissance Chairman Samir J Fancy’s letter to the Muscat bourse by adding the possibility of “misappropriation” in respect of the $2.9 million.
The length of the alleged fradulent activity predates Topaz’s recent expansions in to West Africa, Qatar and Latin America, and suggests the fraud was commited in one of the firm’s Caspian businesses, which were acquired in early 2005, shortly after Renaissance acquired Topaz in a share-swap deal.Â
“Without diminishing the seriousness we attach to any matters of this kind, this should be seen in context of materiality of a business that has generated revenues in excess of US$3.5 billion over that same period,” the Topaz statement says.
“We have included this matter as a disclosure, precisely because of our zero tolerance of such events and our disclosure policy. Within the company operations, the breaches in Code of Business Conduct are now a matter of history, the violations have been identified and stopped and perceived control weaknesses have been strengthened to ensure prevention of future repetition.”
Topaz says it has “identified all the potential issues, which may now be ruled in or out of the process, as we seek to close out these matters administratively.”
Regarding the spate of departures at managerial and executive level within the company, Topaz says only the Finance manager in question has been summarily dismissed due to the $2.9 million fraud uncovered and the departure of Fazel Fazelbhoy was not directly linked. The company states that other managers and the COO and CFO have resigned or been dismissed due to the poor performance of elements of the business and for reasons of costs saving.
The company says that the $30 million upper estimate of costs that might be suffered by the firm mentioned in the Fancy’s statement to the Muscat bourse relate not to the misconduct at the firm, but to “operational and business issues only.”
Regarding the timeliness of disclosures, the statement says it has sought to give “guidance to stakeholders that an issue may arise and provide assurance that we are doing everything possible to mitigate impact. There are other issues for which events have unfolded along a timeline, where premature disclosure may compromise a process or cause harm to the company. These have been disclosed at the first appropriate opportunity.”
